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Peak XV Partners, formerly known as Sequoia Capital India, has announced a 16% reduction in its growth fund in India. This decision comes a year after the firm's split from its Silicon Valley counterpart, Sequoia Capital. The move is driven by the firm's assessment of the market, with Peak XV stating that the current richly priced public market in India necessitates a more measured approach to growth investments. Despite this shift, the firm has reiterated its strong conviction in the Indian and Southeast Asian markets.
Peak XV's decision to downsize its $2.85 billion fund might seem counterintuitive given the current market exuberance. However, the firm believes that this move will benefit both its founders and limited partners (LPs) in the long run. Their strategy emphasizes a focus on seed and venture stage opportunities, where they see greater potential for value creation.
The venture capital firm highlights its strong performance, stating that they are on track to achieve their second-best year for distributions and exits thanks to a robust portfolio. To further align their interests with investors, Peak XV has decided to link a portion of their carried interest to the distribution of profits in their growth and multi-stage funds. This change, however, does not affect the economics of their seed and venture funds.
Peak XV's decision to re-allocate resources reflects a strategic adjustment to the evolving market dynamics. By focusing on early-stage investments, the firm aims to capitalize on the potential of emerging companies while mitigating the risks associated with a mature and potentially overvalued market.
The firm's commitment to the Indian market is unwavering. With over 17 years of experience in the region, Peak XV has established a strong presence, managing over $9 billion in capital across 13 funds and investing in over 400 companies. Notably, approximately 40 of these portfolio companies have achieved revenue exceeding $100 million, demonstrating the firm's track record of success.
Source: ‘We are defined by the choices we make…’: Peak XV downsizes growth fund in India by 16%